In the last thirty years economists have paid increasing attention to determinants of trade policy. Well known in political economy literature (Grossman-Helpman-1994) ‘Protection for Sale’ (PFS) model aims to explain the structure of trade policy. This model emphasizes the influence of special interest groups (SIG) on government policy by means of ‘political contributions’ in a representative democracy. Organized interest groups represent industries and are offering contributions, which politicians value for their potential use in elections. The government chooses trade policy which maximizes a weighted sum of aggregate welfare and total contributions from SIGs. The relative preference of a government for aggregate welfare over contributions from a lobbyist is known in literature as the parameter ‘a’ or ‘welfare mindedness’ of the government. Despite the parameter ‘a’ is simplified in the government objective function, it contains an interesting information when it is observed in dynamics (for various years) or across different countries.

The empirical verification of PFS was conducted in several papers. (Goldberg-et-all-1999) and (Gawande-Bandyopadhyaya-2000) present first two empirical studies using the United States non-tariff industry-level data. Both papers found, as predicted by Grossman-Helpman model, that protection to organized sectors is negatively related to import penetration and import demand elasticity. (Goldberg-et-all-1999) paper states that the weight on the welfare in the government objective function is many times larger than the weight on contributions in the United States in 1983. The paper by (McCalman-2004) uses PFS model to analyze Australian trade liberalization process. The author concluded that the process of liberalization in the country was driven by increase in the parameter ‘a’- the government valuation of welfare. The paper by (Gawande-et-al-2009) presents the institutional determinants of differences in government trade policy formation (value of ‘a’) around the world based on PFS theoretical framework. The authors compared the values of the parameter ‘a’ across 54 countries and found the substantial variation in government behavior (‘a’) around the world. Thus, one of the notable finding of this paper suggests that the quality of the system of checks and balances embedded in the decision-making process correlate with higher welfare-mindedness of governments. (Mitra-et-al-2002) studied the case of Turkey in democracy vs. dictatorship periods.